If you stay at a value resort, the free dining offered is usually the QS plan. If you stay at a mod, it's the regular plan. So if you stay AoA, you'd get QS plan which means you wouldn't have any TS credits at all.
As far as using the TS credit for a QS credit, I think the official answer is no but I know there's been some CMs who can convert credits into QS ones, etc. I don't know the details, though.
If it's free and the only discount offered, you may as well take it. But if a room discount comes out, then you'd be better off taking the room discount because when you do the free dining promo, you are paying full rack rate for the room. You may end up saving more on the room than paying for food, especially if you're not into TS meals. But if free dining is the only discount offered, may as well take it.
I can't speak to how singles do as far as walk ups and ADR availability but I do know that TS restaurants are significantly busier when free dining is offered.